Have you ever noticed a recurring charge on a credit card that you don’t recall every authorizing? If you did, you’re not alone.
Consumers can easily fall into the trap of unanticipated, repeating monthly charges. Sometimes the charges are small and that’s why they go unnoticed. Nonetheless, they are often unauthorized or the consumer may not realize that they signed on to such an arrangement.
A new CreditCards.com study found that 35 percent of 1,002 U.S. adults surveyed had set up an account – such as a streaming TV service or a magazine subscription or a gym membership – that enrolled them in automatic monthly payments without them knowing about it.
Additionally, the survey found that 42 percent of consumers said it’s challenging to rescind or turn off those recurring charges.
U.S. laws prohibit companies from deceiving people into paying monthly charnges that were not authorized. But online merchants use “negative option” offers, which require consumers to cancel services or product shipments to avoid recurring charges, to turn a profit.
“The main reason consumers get caught in these negative option offers is the material details, conditions and terms are not clearly and conspicuously shown,” Bonnie Patten, executive director of the consumer watchdog group Truth in Advertising, tells CreditCards.com.
CreditCard.com puts it this way: “Many of us are guilty are signing up for trial accounts and services online without reading the full terms and conditions – even the ones that don’t ask you to study a 10-page PDF document with small type.”
There are consumer protections in place to remedy some of these situations. Section 5 of the FTC Act prohibits “unfair or deceptive” practices that could mislead consumers. Additionally, the Restore Online Shopper’s Confidence Act (ROSCA) protects consumers from getting charged for services online without their consent and mandates that merchants fully disclose their terms. Sometimes those terms are not clearly stated or displayed.